The prime motivation for "by owner" sellers in a soft market is to wring as much equity out of the home as possible. Typically prices aren't rising quickly, or may even be slightly declining. Instead of seeing big dollar signs at the end of the sale, the owners are looking at their perceived equity being squeezed by closing costs. The only apparent way to preserve that equity is to cut those closing costs and since the agent's commission is normally the largest part, these sellers look for a way to reduce or eliminate that commission. Hence the impetus to sell "by owner."

Contrarily, the number of "by owner" sellers sometimes actually declines in hot markets. Many owners simply feel okay paying the expense of a commission because they've raked in so much equity appreciation. It's a kind of "share the wealth" thinking.

In softer markets, on the other hand, where owners are seeking to preserve their equity, selling "by owner" actually tends to increase. Here the feeling is that there isn't enough wealth to go around.

In either market making the attempt to sell your home "by owner" can make good sense. For example, on a home with a market value of $300,000, a 6 percent commission is $18,000. Saving that much money by selling on your own is nothing to sneeze at, for any home seller.

Further, the hidden advantage of selling by owner is that if done properly, you may be able to get a quicker sale. This is of particular importance when the market is softer.

A quicker sale? How is that possible when most buyers prefer to have an agent "grease the works," handle all the nuts and bolts of the transaction?

The answer is that a "by owner" seller can offer a buyer a discount and still save part of the commission. In our $300,000 home example, the seller can cut the price by, say, $9,000, the equivalent of half a 6 percent commission. Now the home is selling at discount, less than a nearly identical home next door that's listed at full market price because that seller has to pay a commission. Buyers love discounts and flock to sellers who offer them. The buyer saves on the purchase. And the seller not only gets a quicker sale, but also saves half a commission.

Of course, there are the usual negotiations in which the buyer may offer a lower price, but that's the case in any real estate transaction. Indeed, with a discount already offered, the buyers may be happy to come in at or close to full price.

TIP

Why not try selling on your own in any market? Set a time limit, a couple of weeks, a month, three months - whatever. If you're successful, you'll have saved money and, perhaps, gotten a quicker sale. If not, you can still list with an agent. By trying yourself you'll know that you didn't "leave any money on the table."